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Gas or electric

Gas vs Electric: Is It Cheaper to Run an All-Electric Home?

Gas is cheap per unit of energy, but heat pumps turn each unit of electricity into several units of heat. Here is how the numbers compare in each capital.

Checked against AER and government data, October 2026

Gas vs electric: the cost of heat

Cost per kWh of heat delivered
CityGas rateGas heatElectricity rateHeat pump heat
Sydney4.95c/MJ20.96c/kWh33.14c/kWh9.47c/kWh
Melbourne4.16c/MJ17.64c/kWh31.98c/kWh9.14c/kWh
Brisbane6.16c/MJ26.09c/kWh27.97c/kWh7.99c/kWh
Adelaide7.02c/MJ29.72c/kWh41.91c/kWh11.97c/kWh
Canberra5.64c/MJ23.90c/kWh36.95c/kWh10.56c/kWh
Gas: median first-block market rate in each area, AER plan data, 14 October 2026, converted at 3.6 MJ per kWh. Electricity: 2026-27 regulated flat rate for the state's first network area. Assumes a gas appliance 85% efficient and a heat pump or reverse-cycle unit delivering 3.5 units of heat per unit of power. Real efficiencies vary by model and weather.

On these figures, heat from an efficient electric heat pump costs less than heat from gas in every capital. The existing cheapest way to heat a home guide compares heater types room by room.

What going all-electric involves

  1. Hot water

    A heat pump water heater replaces gas hot water. Discounts are available through STCs and state programs. See gas hot water costs.

  2. Heating

    Reverse-cycle split systems or ducted reverse-cycle replace gas heaters. See gas heater running costs.

  3. Cooking

    An induction cooktop replaces gas burners. See induction cooktop costs.

  4. Close the gas account

    Once nothing uses gas, ask your retailer to disconnect or abolish the connection so the supply charge stops. See disconnecting gas.

Replace at end of life

Swapping a working gas appliance rarely pays off quickly. Plan the switch so that each appliance is replaced with an electric one when it fails, and drop the gas connection once the last one goes.

When gas can still make sense

Gas may suit

Keep for now
  • Gas appliances are recent and working well
  • Very cold climates where heat pump output drops on the coldest nights
  • You cannot install outdoor units, for example in some apartments

Electric usually suits

Switch
  • An appliance needs replacing
  • You have or plan rooftop solar
  • Only cooking uses gas, so the supply charge is most of the bill
  • You are in Victoria or the ACT, where gas is being phased out

Common questions

Per unit of energy, usually yes. Per unit of heat, an efficient heat pump or reverse-cycle air conditioner is usually cheaper, because it delivers several units of heat for each unit of electricity.

At least the daily supply charge, which is about $357 a year on a typical Melbourne gas plan and $276 in Sydney, as at 14 October 2026. Your electricity use will rise, so the net saving depends on your appliances.

When it needs replacing, usually yes. Running costs are typically lower, and reverse cycle also cools in summer.

Sources

Gas prices come from the AER plan data, priced by us. Electricity prices are the 2026-27 regulated rates. Efficiency figures are stated assumptions. Last checked October 2026. Prices include GST unless we say otherwise.